graphene innovations drive nano material …...the global medical device coatings market is...
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enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
Welcome ShareholdersNASDAQ: CVV
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
Safe Harbor Statement
Certain statements in the following presentation relate to future results that are forward looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to those noted in our forms 10-K, 10-Q, and other filings with the SEC.
This presentation includes historical and forward-looking ProForma information. The Company assumes no responsibility to update the information contained in this presentation.
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
AgendaI. CVD Today
Company, customers, and markets
II. Where we are going
Strategy and tactical actions
III. Financial Update & Outlook
IV. Q&A
enabling tomorrow’s technologies™
March 2017| © 2017 CVD Equipment Corporation | All rights reserved
enabling tomorrow’s technologies™
At a Glance
NASDAQ:CVV
FOUNDED
1982
HEADQUARTERS
Central Islip, NY
NUMBER OF EMPLOYEES
192
CVD Equipment Corporation is aleading deposition equipment andcoating solutions supplier with 34years of innovation.
We are at the confluence of materials-driven market megatrends with unique capabilities to capitalize on these opportunities…
Megatrends:Advanced Composite MaterialsAdditive Manufacturing Energy EfficiencyMedical DevicesNanotechnology
Keys to CVD’s Value Proposition:Design FlexibilityDirect Customer EngagementExperienceManufacturing CapacityMaterial Science InnovationProprietary Software Vertically Integrated Manufacturing
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
How we enable tomorrow’s technologies Innovation leader since 1982
Thin Films, Coatings, & Surface Modification Equipment Design & Development Production Scale Manufacturing Installation, Start-up and Operational
Service
Process Research & Development Nanomaterial Research Equipment Optimization Customer Process Development Services Funded Research Collaboration
enabling tomorrow’s technologies™
March 2017| © 2017 CVD Equipment Corporation | All rights reserved
enabling tomorrow’s technologies™
Vertically Integrated Capabilities Vertically integrated design and
manufacturing enables rapid system development
We procure raw materials & components and deliver finished systems
We leverage a network of industry leading suppliers and contractors as required
Provide turnkey systems including instrumentation, process control software, gas handling, and exhaust abatement
35 years of experience in design, engineering, and manufacturing of chemical vapor deposition and related equipment
Application laboratory to support process, equipment and material development
• Installation and performance testing
• Technical and equipment services
• Integrated system design, engineering, and manufacturing
• Quartzware design and fabrication
• Fully equipped machine shop
Current Facilities
HeadquartersCentral Islip, NY
134,500 ft2 facility with6,000 ft2 applications lab
SDC® FacilitySaugerties, NY
22,000 ft2 facility with 4,000 ft2 cleanrooms
Tantaline® Facility Nordborg, Denmark
30,000 ft2 facility
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
Driving to new heights
Technology
Services
Operations
Technology Reactor Configuration Chemical & Gas Delivery Material Handling Software Optimization
Services Field Services and Equipment Support Laboratory Process Development Grant Assistance Collaborations Product Coating Services
Operations Expansion of Engineering Capabilities Increased Manufacturing Capacity Optimization of Sales Operations
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
Targeted Marketing to Fill the Sales Pipeline
Website in 2015
Website in 2016
New website launched Oct. 2015
Updated website to better service existing customers and attract new prospects
Pipeline approach is driving increased sales
Coordinated digital and traditional marketing
Updated website and improved search engine optimization (SEO) to
reach targeted customers
Automated online RFQs to directly convert to leads
Robust process for lead qualification and processing through to quote
Revised format, updated content, improved SEO, and streamlined branding has increased CVD’s online visibility
Higher quality leads
increasing quote
conversion rate
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
Our Customers…Are Innovators Are Market Leaders
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
We Align Business Operations to Major Market Opportunities
Aerospace Continuing our strong position with completed shipments and a $30 million follow on order in 2nd quarter of 2016
Medical & Life Sciences Multi-unit shipments, continued production phase, and additional projects in incubation
Research & Development Next phase in the industrial partnership with Penn State University to advance 2D crystal device development
Chemical & Petrochemical Opportunity to penetrate the market with new product and services offerings
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
AEROSPACE
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
Commercial Aircraft Market Outlook*
“Rapidly evolving aviation product offerings and growth in emerging markets are broadening the geographical balance of airplane demand, spurring a worldwide requirement for over 39,620 new jet airplanes, valued at $5.9 trillion.”
Continuing demands for new aircraft and improved fuel economy are key drivers for developing new materials and coatings. A 10-20% increase in fuel efficiency is driving this market.
*Boeing, Current Market Outlook 2016-2035. (2016). Retrieved December 1, 2016 from http://www.boeing.com/resources/boeingdotcom/commercial/about-our-market/assets/downloads/cmo_print_2016_final_updated.pdf
Airlines moving from large airplanes to small and medium widebodies Older, less efficient airplanes replaced with more efficient, newergeneration airplanes
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
2015 2035
Units
Retained Replacement Growth
Current Fleet
0%
20%
40%
60%
80%
100%
120%
1995 2015 2035
In-Service Widebody Fleet
Small Medium Large
57%
43%
Material Driven
Mega-trend
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
Our Position in the Aerospace Industry
Received a $30 million order from a major aviation component supplier late in 2nd
quarter of 2016
Other CVD systems were delivered to this customer in 2014 and 2015
CVD’s leading position as a key supplier of next generation technology for the aerospace industry
Leading Supplier of Next Generation Technology
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
MEDICAL & LIFE SCIENCES
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
Medical & Life Sciences Market Outlook Medical device coatings are widely used to
augment product surface function and to improve performance
Economic downturn in late 2000’s did not slow demand for total joint arthroplasty*
Expansion of U.S. healthcare spending between 2011 and 2021, from $2.7 trillion to $4.8 trillion, is anticipated to fuel the future demand for arthroplasty*
The global medical device coatings market is predicted to rise from US$6.6 billion in 2013 to US$10.9 billion in 2020, with a compound annual growth rate (CAGR) of 7.40%**
Tantalum coatings for surgical implants and body part replacements will continue to grow
*Kurtz S, Ong K, Lau E, et al. Impact of the Economic Downturn on Total Joint Replacement Demand in the United States, Updated Projections to 2021. J Bone Joint Surg Am. 2014, 96A(8), 624.
**Nachiket Ghumare, Medical Device Coatings Market - Global Industry Analysis, Size, Share, Growth, Trends and Forecast 2014 - 2020, Transparency Market Research
Current status 800,000 per year
Future projection 1,500,000 by 2020
Annual Number of Procedures in
the US
Knee & Hip Replacements in the US*
Material Driven
Mega-trend
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
Biomedical ApplicationsCVD Co-Authored a publication with University of Cincinnati:
Magnesium single crystals for biomedical applications grown in vertical Bridgman apparatus
Next generation medical implants based on biodegradable materials have been the focus of much research over recent years
Biodegradable implants for orthopedic applications do not require a second surgery
Cardiovascular magnesium stents are currently undergoing clinical trials
Our paper describes the systems we developed for magnesium single crystal growth
Single crystal magnesium has superior properties compared to currently commercially available magnesium, allowing for use as load bearing biodegradable bone implants
*University of Cincinnati & CVD Equipment Corporation, Magnesium single crystals for biomedical applications grown in vertical Bridgmanapparatus. AIP Publishing (2016). Retrieved December 6, 2016 from http://scitation.aip.org/content/aip/journal/rsi/87/10/10.1063/1.4965237
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
RESEARCH & DEVELOPMENT
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
Laboratory ServicesOur process engineers and materials research scientists support next generation product
development.
We provide contract process development services for emerging materials, including graphenesynthesis, 3D cellular materials, CNTs, TMDs, semiconducting nanowires, substrate coatings,epitaxial films, among others.
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
FirstNano® EasyTube® 2000 horizontal hotwall reactor25 mm x 50 mm substrate
3” wafer processing of TMDs and Epi graphenehorizontal cold wall reactor
2” and 3” wafer processingvertical cold wall reactor
cluster configuration with loadlock and transfer chamber
Current TMD Contracts
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
Collaboration Services
“We are pleased to continue to benefit from the industrial perspective and specialized equipment manufacturing expertise that CVD Equipment Corporation brings aspart of our ongoing collaboration.”
Joan Redwing Professor of Materials Science and Engineering, Chemical Engineering and Electrical Engineering
Penn State University Collaboration launched in 2015 with PSU to develop 2D material
equipment and processes Initial phase success resulted in PSU being awarded $17.8M from the
NSF to establish a center of excellence for 2D material research CVD selected for collaboration based on our early and leading
presence in 2D material equipment development CVD contributions include technical input, consultation, program
review, and supply of equipment to the university
CVD has secured other contracts for 2D material synthesis, including contracts to the US military
CVD has established itself as a leading equipment supplier for 2D materials.
Funding by the NSF and the US military signals that there is promise in these materials, with the expectation that we will see multiple orders for 2D materials systems in the coming years
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
Diversification & Growth Strategy
FUTURETechnical solutions provided through unique materials,
coatings, and deposition equipment
PRODUCTIONKey Supplier of
custom deposition equipment for the
aviation, medical, and research markets
RESEARCHTechnology leader for CVD equipment
Growth Diversification
Recurring Revenue
Margin Expansion
Leverage Existing
IP
Shareholder Returns
Organic growth based on our existing knowledge and customer base while broadening our scope of enabling technologies through strategic acquisitions
Accelerate growth by leveraging our equipment know how to produce high value materials, coatings and services
GOALS
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
Growth StrategyContinued investment in a diversified growth plan$10MM investment in facilities enabled >$50MM in production scale orders
Internal investment in systems for Sales and operational efficiency
Collaborative and in-house R&D for equipment and material development
Selective criteria for identification and evaluation of potential acquisitions
Technically differentiated coating equipment or services
Low opportunity cost based on leveraging of CVD’s capability, resources and know-
how
Proven technology that is undervalued by the market
Achievable market niches of $5MM to $50MM
Profitable within 2 years of acquisition
Example: Anti-corrosion $12 billion market in 2015 expectedto grow to over $18 billion by 2023,largely driven by demand fromspecialty chemical, oil and gasinfrastructure markets
Transparency Market Research
Acquisition targets for CVD at this phase of the technology
development cycle
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
Heading into the futureLeveraging know-how and expanding customer base to accelerate growth
1982
1999
2001
2002
2005
2006
2013
ResearchInternational
Conceptronic
Facilities156,500 ft2
Company owned
ApplicationLab opens
PILOT & PRODUCTION EQUIPMENT
GAS & CHEMICAL DELIVERY SYSTEMS
RESEARCH & DEVELOPMENT
EQUIPMENT
PROCESS DEVELOPMENT
SERVICES
2017COATING SERVICE
CAPABILITIES WILL OPEN UP NEW MARKETS
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
Our Company, Products, and Services
R&D systems for processinggraphene, carbon nanotubes,semiconducting nanowires,2D materials, and thin filmsfor research laboratories
Corporate Headquarters & Parent Company
Ultra high purity (UHP)gas & chemical deliverysystems and installationsfor high-tech fabricationprocesses
®
Our tantalum vaportechnology, Tantaline®treatment, creates atantalum surface alloyon parts that are highlyexposed to corrosion
Develops and manufacturesprocess/coating equipmentsolutions for pilot andproduction applications
? ?
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
Tantaline® Treatment ServicesTantaline® is a provider of tantalum alloy products and services for diversification of product offerings
Facility located in Nordborg, Denmark will increase geographic presence
Tantalum is widely considered the best option for acid corrosion resistance
Revenue potential $20 million to TBD
Leverage CVD’s equipment experience for cost efficient scale-up of manufacturing capacity
Coated parts include tube fittings, valves, fasteners, and a range of other functional components
Broad range of markets including chemical processing, oil & gas, research, medical devices, and pharmaceutical
9 patents and patent applications in place
Existing customer base in the Americas, Europe, and Asia includes word class leaders in the chemical process industry
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
Chemical & Petrochemical
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
Coating & Surface Modification Services
Serving the Chemical & Petrochemical Markets
Tantaline® solutions have been applied across the chemicalprocessing industry since 1993 and have proven to be a safe,durable, and a higher performance alternative to specialty metals.
There is a need to access higher impurity oil and gas reserves. Inthese cases, higher temperatures, pressures, and concentrations ofcorrosive gases like hydrogen sulfide (H2S) are pushing the limits ofconventional materials.
In the offshore environment, Tantaline® can eliminate problemscaused by the pitting corrosion of stainless steel and titanium thatoccurs in salt water at high temperatures.
In the oil and gas sector, Tantaline® is a perfect choice where, forexample, titanium has problems handling media that containmethanol or hydrogen sulphide.
Tantaline® products have proven theirperformance in various applications since 1993.Since then, Tantaline® has gained broad appeal,and Tantaline® treatment is utilized in numerous(and growing number of) industries because ofits unmatched performance and attributes.
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
Financials Through Q4 2016
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
CVD Equipment Corporation and SubsidiariesComparison of Consolidated Statements of Operations
(in thousands)
Three Months Ended December 31 Nine Months Ended December 31
2016 2015 2016 2015
Revenue $7,325 $8,193 $20,955 $38,965
Gross profit 3,386 3,103 7,105 15,146
Operating expenses 2,202 2,106 7,829 10,554
Operating (loss)/income 1,184 997 (725) 4,592
Net (loss)/income 770 391 (149) 3,205
Diluted earnings per share $0.12 $0.06 $(0.02) $0.51
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
CVD Equipment Corporation and SubsidiariesCondensed Consolidated Balance Sheets
(in thousands)
December 31, 2016
December 31, 2015
Assets
Current assets:
Cash and cash equivalents $21,677 $13,073
Accounts Receivable, net 608 3,091
Costs and estimated earnings in excess of
billings on contracts in progress 2,597 4,635
Inventories 3,287 2,987
Other current assets 235 167
Total current assets 28,832 24,551
Property, plant, and equipment, net 14,239 14,827
Other assets 68 86
Total assets $45,605 $41,131
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
CVD Equipment Corporation and SubsidiariesCondensed Consolidated Balance Sheets
(in thousands)
December 31, 2016 December 31, 2015
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $743 $308
Accrued expenses and other current liabilities 1,944 3,446
Current portion of long-term debt 300 580
Billings in excess of costs and estimated
earnings on contracts in progress 5,262 --
Deferred revenue 78 308
Total current liabilities 8,327 4,642
Long-term debt 2,965 3,265
Total liabilities 11,292 7,907
Total stockholders' equity 34,313 33,225
Total liabilities and stockholders' equity $45,605 $41,132
enabling tomorrow’s technologies™March 2017| © 2017 CVD Equipment Corporation | All rights reserved
Outlook2016
Rebuilt backlog with large scale production orders including all-time record booking in Q3
Realized positive impact from sales and marketing efforts with uptick in orders
Technology advancements through collaboration and internal R&D
Initiated plan for strategic growth through acquisition and internally through new products
2017
Accelerate growth through acquisition and internally through new products
Revenue realization through delivery of our significant backlog
Follow on orders for production, spares and equipment services
New revenue from accelerated growth opportunities
As a result, expecting record year in revenue and gross margins
Beyond 2017
Recurring revenue stream (materials and services) becomes meaningful
Continued growth in revenue and expansion of gross margins